The British government has warned that the latest audit of Brussels spending "seriously
undermines the credibility of the EU's financial management".

British opposition to Brussels budget increases hardened on Tuesday after the EU's auditor failed to give a clean bill of health to £89 billion of spending "affected by material error".

The European Court of Auditors reported on Tuesday that controls over 86 per cent of the EU budget last year were only "partially effective", a conclusion that has further polarised the battle over European Commission demands for a sharp rise in spending.

Vitor Caldeira, the ECA's chairman, said that auditors had "found too many cases of EU money not hitting the target or being used sub-optimally" at a time when national public spending was being cut and the eurozone was imposing austerity targets.

"Times are hard. With Europe's public finances under severe pressure, there remains scope to spend EU money more efficiently and in a better targeted manner," he said. "EU financial management is not yet up to standard."

Despite 18 years of critical reports by the auditors, the Commission and European Parliament have defied calls for austerity measures at the EU level by demanding an 11 per cent increase to long-term Brussels expenditure from 2014 to 2020.

The report will pile renewed pressure on David Cameron, the Prime Minister, to be tougher during negotiations on the future EU budget following a humiliating defeat on the issue in the House of Commons last week.

"I think the auditor's findings will definitely harden attitudes in the Commons. The continued waste and fraud will accentuate the concerns MPs have over increased spending," said Mark Reckless, Conservative MP for Rochester and Strood.

A British government spokesman expressed concern at the report "at a time when public spending is tight across Europe".

"We all need to have confidence that EU spending is being implemented as effectively as possible," he said.

"Yet for the 18th consecutive year, the ECA has not been able to give a positive statement which seriously undermines the credibility of the EU's financial management."

But the commission celebrated the auditor's finding that overall error rate for the entire EU budget was "only" ﾣ4 billion and blamed national governments for failing to implement spending rules for Brussels funded projects.

"I repeat my call for member states to take their responsibilities more seriously when it comes to their role in protecting EU taxpayers' money," said Algirdas Semeta, the commissioner responsible EU audit and anti-fraud policy.

"A little more effort by member states to control projects properly and retrieve misused funds could go a long way, particularly in this time of economic difficulty."

Martin Callanan MEP, the leader of the European Conservatives and Reformists Group in the European Parliament, called on the commission "to take responsibility for this report".

"Before asking for more taxpayers' money, perhaps the commission should prioritise better spending of the money it already has," he said.

The commission dismissed the ECA's finding of "serious failure to respect public procurement" with the allocation of contracts, funded by the EU to the tune of £13 million, for building a Romania-Hungary gas pipeline.

"We interpret the rules differently," said a spokesman.

Marta Andreasen, the commission's former chief accountant and now a Ukip MEP, said: "This is now the 18th year in a row that the ECA has refused to give the EU Budget a clean bill of health. Worse still the 'error rate', shorthand for unnacounted money, is on the rise."

Kersti Kaljulaid, an Estonian member of the ECA, also highlighted concerns over the increased frequency rate for "material error" in audited EU projects which rose by eight per cent in 2011, from 36 to 44 per cent. "It is a sign of warning, the higher the risk of messing up big time," she said.